The rally in U.S. stocks slowed on July 21, but the S&P 500 and Nasdaq Composite indices managed to set new records at the close of trading. Investors' optimism is linked to the expectation of quarterly reports - this week the first companies from the "Magnificent Seven" will reveal their results. 

Details

On July 21, the broad market index S&P 500 added only 0.1%, but for the first time closed trading above 6300 points. During the day, the index grew by 0.6%, but then slowed down. The Nasdaq Composite Index gained 0.9% during trading but slowed to 0.4% by the end of the day, closing at 20,974.17, also a new record.

The indexes were pushed to new highs by large-cap stocks, which are rising ahead of several important earnings reports this week, writes Reuters. On Wednesday, the first companies in the so-called Magnificent Seven - Alphabet and Tesla - will reveal their quarterly results. Their results could set the tone for reports from other major companies in the coming days, the agency notes. Quotes of the parent company Google on July 21 rose by 2.8%. Shares of Meta Platforms and Amazon added more than 1%, while Apple shares rose by 0.6%. Shares of Tesla declined by 0.4%. Some analysts, notably Baird's Ben Kallo, took a "cautious" stance on Tesla, warning of the risk of worsening its full-year earnings outlook due to a delay in the release of a cheaper car and the impending repeal of the federal tax credit for electric car purchases.  

Mobile operator Verizon also contributed to the growth of indices - its shares priced by 4% after improving the annual forecast. 

Why investors remain optimistic 

The reporting season for the quarter that ended in June has gotten off to a good start, reports CNBC. By now, more than 60 companies in the S&P 500 index have released their results. According to FactSet, more than 85% of them exceeded expectations, the channel reports. 

According to LSEG data cited by Reuters, analysts expect companies in the S&P 500 to report earnings growth of 6.7 percent on average in the second quarter, with large technology companies accounting for much of that growth.  

"Most of the 'Magnificent Seven' companies should maintain market leadership thanks to impressive earnings growth, strong cash flow and continued demand for their products," said Treasury Partners Chief Investment Officer Richard Saperstein to Bloomberg. - The tailwind in AI is just starting to accelerate and will benefit the biggest players in the tech sector the most."

This article was AI-translated and verified by a human editor

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